Cadbury: Taking a bow… - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Cadbury: Taking a bow…

Oct 31, 2002

Chocolate major, Cadbury India, has reported a strong performance for the September quarter. The company finished 3QFY03 with 11% growth in topline and nearly 19% growth in bottomline. The performance is much better than what it had reported till the first half of FY03 (5.5% topline growth and 10% bottomline growth excluding extraordinary income).

(Rs m)3QFY023QFY03Change9mFY029mFY03Change
Net Sales1,9642,17911.0%4,6485,0127.8%
Other Income25276.8%66706.6%
Expenditure1,6121,7719.9%3,8704,1838.1%
Operating Profit (EBDIT)35240916.0%7798296.4%
Operating Profit Margin (%)17.9%18.7% 16.8%16.5% 
Interest 66-6.6%1612-23.9%
Depreciation738415.6%18220613.0%
Profit before Tax29834515.8%6466805.3%
Exceptional items-92--296-
Tax10613123.1%243235-3.4%
Profit after Tax/(Loss)18221618.6%40154135.0%
Net profit margin (%)9.3%9.9% 8.6%10.8% 
No. of Shares (eoy) (m)35.735.7 35.735.7 
Diluted Earnings per share*20.424.2 15.020.2 
*(annualised)      
Current P/e ratio 20.4  24.4 

Historically, Cadbury has grown at a CAGR of 17% in terms of topline in the last decade. The company has been the undisputed king of the Indian chocolate market with a 70% share. However, over the last few quarters, not only the growth in chocolate market has slowed down, but Nestle India has emerged as a keen competitor to Cadbury. Infact, in 1QFY03, Nestle reported nearly 40% growth in its chocolates division. However, the spurt indicates that Cadbury has fought back well in September quarter.

Cost-break-up...
costs as a % of sales3QFY023QFY039mFY029mFY03
Material costs37.7%35.3%36.7%36.3%
Staff costs9.2%8.7%9.9%9.6%
Advertising & Marketing11.6%13.3%11.3%12.9%
Other expenditure23.6%23.9%25.3%24.6%
Total expenditure82.1%81.3%83.2%83.5%

The company improved its operating margins led by lower raw material to sales ratio, indicating higher realisation for its products during the quarter. In recent times, not only has Cadbury repackaged most of its key brands (Dairy Milk, 5-star, Perk, Gems etc.), it has also introduced chocolate brands on covering each price point. At the lower end, there is a Rs 2 'Chocky' bar, at the higher end there is 'Temptations' at Rs 30. Apart from this, the company also introduced a new brand called 'Chunky' to expand its consumer base and also to upgrade its existing consumers. The company has launched bigger pack sizes for all its key brands in recent times.

The company has backed these new introductions with higher advertising and sales promotion. It is evident from the fact that Cadbury's advertising to sales ratio has inched up to 13.3% in 3QFY03 from 11.6% in corresponding quarter last year. And all this is showing on its bottomline.

On a nine month basis, Cadbury has reported an 8% topline and 11% bottomline growth excluding extraordinary income. During the June quarter, the company raked in Rs 108 m in the form of profit on sale of excess immovable property at Thane.

The management delisted the Cadbury stock from the BSE recently and NSE too is going to see a delisting soon. At the current price of Rs 493 (NSE), the stock trades at 24.4x its annualised 9mFY03 earnings. The stock has been range bound ever since the parent company's open offer at Rs 500 per share. The offer was a success and currently the promoters' hold 94% stake in Cadbury India. Due to this, liquidity in the stock has dried up.

Equitymaster requests your view! Post a comment on "Cadbury: Taking a bow…". Click here!

  

More Views on News

What Led to the Massive Surge in the Stock of Jubilant FoodWorks? (Views On News)

Aug 18, 2021

Jubilant FoodWorks hits new high, surges 35% in a month on growth prospects.

Zomato Delivers a Hot Listing. Did You Grab a Bite? (Views On News)

Jul 23, 2021

Zomato scripted history on Friday by becoming India's first unicorn to debut on the stock exchanges.

Jubilant FoodWorks Hits Record High on Strong Sales Recovery in June Quarter (Views On News)

Jul 22, 2021

Jubilant FoodWorks is back in the black, aided by higher revenues despite the second wave disrupting operations.

Varun Beverages Q1 Review: Net Profit Rises Two-Fold; Board Announces 1:2 Bonus Issue (Views On News)

May 4, 2021

Varun Beverages' two-fold jump in profit came on the back of strong volume growth and demand recovery.

Burger King IPO: Should You Subscribe to This QSR Chain Business? (IPO)

Dec 2, 2020

Does the company with one of the fastest-growing QSR chains in India have sound prospects?

More Views on News

Most Popular

5 Indian Companies that are Leading the AI Race (Views On News)

Sep 9, 2021

During the pandemic, India reported the highest increase in the use of AI at 45% compared to other major economies. AI has potential to add US$90 bn to the Indian economy by 2025.

5 Specialty Chemical Stocks that Turned Multibaggers in One Year (Views On News)

Sep 17, 2021

These specialty chemical stocks have surged 200% or more in the last year. Do you own any?

How to Create a Second Income from Trading (Profit Hunter)

Sep 10, 2021

My trading system that works in all kinds of markets.

A Rare Buying Opportunity in an Exciting Stock (Profit Hunter)

Sep 16, 2021

Whether agriculture sector goes through a structural transformation or not, this agrochemical stock has a good chance of winning.

5 Indian Companies with Over 7% in Dividend Yield (Views On News)

Sep 17, 2021

These stocks will give you better yields than bank deposits.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2021
Get our special report Multibagger Stocks Guide (2021 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

TRACK CADBURY (I)

  • Track your investment in CADBURY (I) with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MARKET STATS